The fashion giant said it has seen a positive response from shoppers to its spring collection as it posted a rise in profits
H&M, the fashion giant, has seen a positive response from shoppers to its spring collection, leading to a rise in profits.
The company’s shares in Sweden jumped on Wednesday after it reported better-than-expected profit for the first quarter. Daniel Erver, H&M’s chief executive, said the company is “on the right track” as it competes with fast fashion rivals like China’s Shein.
Despite a 2% dip in net sales for the quarter to February 29 compared to last year, the fall was smaller than analysts predicted. The group said sales are moving in the “right direction”, with a 2% increase so far in March.
It also reported higher-than-expected operating profits of £155million for the quarter, up from £54million a year earlier. Mr Erver said: “The quarter’s sales gradually improved during February with well-received Spring collections, which is a positive sign that we are on the right track.
“Our priorities remain firm: to enhance the assortment, always offer the best price, create inspiring experiences in both physical and digital environments, and to strengthen our brands. Thanks to the investments being made in tech, the supply chain and sustainability, combined with continued cost control, committed colleagues and a long-term perspective, we see good opportunities for profitable and sustainable growth.”
Robyn Duffy, senior analyst at RSM UK, said: “With new CEO Daniel Erver focused on profitability and improving margin, we’ve seen gains in these areas which should go some way to reassuring investors.”
“With aims of reaching a 10% operating margin by the end of the year, this should allow the business to invest in better quality product at a better price, giving H&M a more competitive edge against its rivals. H&M will be one to watch for the rest of the year in terms of whether this new strategy will pay off.”
